Rates Move Higher ... Now What?
After Fed raised interest rates the first time in four years, what will happen to the financial products each of us possess? Kiplinger's Personal Finance provides a useful sum-up.
- For adjustable-rate mortgage (ARM) owners, rate increase is due at next adjustment time. For borrowers with LIBOR as rate index, the change is already build into the rate before Fed announcement.
- For people looking for a mortgage, hybrid ARMs with five to ten years' fixed interest rate are recommended (choose the period that reflects how long you expect to be in that home). Be sure to lock in the rate when you are about to purchase.
- For HELOC owners, the interest rate will increase in one to two billing cycles and minimal monthly payment will change accodingly.
- For credit cards, although 65% of all cards have a variable rate, a quarter point hike will not push the rate above the floor, so there should be no immediate change unless Fed raises interest rate several times later. Issuers are unlikely to adjust fixed rate cards in this competitive market.
- For people searching for a new car, auto-financing rates are unlikely to change due to competition.
- For saving in money-market funds, rate will reflect the quarter point change in several months.
- For CD savers, one will likely see a rate increase the next time CD is renewed.
- For saving bonds, EE series bonds are recommended because they historically yield two percentage points over inflation (andwill outperform I series bonds in the long run)
If you don't have a credit card with rebate on gas purchases yet, take a look at this nice round-up from CardWeb on gas-rebate cards. Don't bother to change shifts to neutral at stop to save a few drops of gas; having 5% cashback on ... Read
WSJ reported that for the first time in history, plastic has replaced cash and check as the method of payment. Read
A list of check card reward offerings from U.S. Bank, CitiBank, Bank of America and Charter One. Note all of these programs carry an annual fee from $20 to $65, and the pay out is usually less than 1%. Read
Liz Pulliam Weston contributed a well-written article for people searching for the first reward card. Read
As the Federal Reserve continues to push up interest rates, credit card rates continue to rise as well. Now, more than ever-- consumers should take advantage of 0% APR Credit Cards.
Since most credit cards have variable APR's (based on the PRIME RATE), rates will continue to rise as the Fed attempts to curb inflation. Even if you have a fixed rate credit card, banks reserve the right to raise your rates at any time! They are only required to give you 15 days notice before an increase! And you thought your rate was "FIXED".
Using a 0% credit card could save you thousands of dollars in interest; especially, if you transfer your balances to a new card before the 0% intro period is over. If you don't plan on switching cards, you can still save a ton of money over a 12 month period with a 0% APR offer. Just be sure to find the lowest ongoing APR (after the intro).
